Abstract

Merger and Acquisition has become an increasingly common reality of the organizational life (Buono and Bowditch 1989). Although a lot of articles have been written about the monetary, management efficiency, shareholders wealth maximization and strategic aspects of M&A, not so many have written on the impact on the banking industry as regards to the financial and non-financial positive effects of the synergy amongst the various banks involved in the merger. Based on the peculiarity of the merger as it was not motivated by banks in a drive to seek efficiency by was as a result of a directive issued by the Central Bank of Nigeria with aimed at strengthening the financial capacity of the banks.

This dissertation seeks to discover the impact of merger and acquisition in the banking industry narrowing its findings to the Nigerian Banking industry with an aim to compare the financial performance of the bank before and after the merger deal. With reference to on of the major players in the banking industry Intercontinental Bank Plcs the financial statement of the bank would be evaluated by the use of key financial ratio analysis and the usage of banks share price data spanning over a period of five years which was sourced from Cash Craft Asset and Management Limited a reputable investment outfit in Nigeria.

This paper has been able to effectively assess and analysis the impact of the merger on the Nigerian banking sector, through the a summarized published five year financial statement of Intercontinental Bank Plc and the memorandum of understanding amongst the merged banks (8th of September, 2005) coupled with share prices movements of the banks daily stock prices on the Nigerian stock exchange from 01/10/03-30/06/07 which covers a three segmented merger period of the bank i.e. the pre-merger period, the actual merger period and the post-merger period of the bank.

The research is conducted to give an specific and an in-depth result findings rather than an over-view of the after-math of the merger on the banks in the Nigerian economy. Hopefully, this write-up would contribute to the literature on the topic of mergers in the banking industry most especially in the developing economies.